4. Statement by the Minister for Economy: The Shared Prosperity Fund and Levelling-up Fund

Part of the debate – in the Senedd at 3:50 pm on 28 September 2021.

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Photo of Vaughan Gething Vaughan Gething Labour 3:50, 28 September 2021

And by making these funds solely available to competing local authority bids, the UK Government is also wilfully creating sector funding gaps, including among higher and further education, the third sector, and business. These sectors have previously maximised European Union funds to help close disparities in research and innovation, to support vulnerable people in society, and to help boost competitiveness.

We also have real concerns about the threat of UK Government plans on the future scale of EU-funded schemes, including what that means for Business Wales, the Development Bank of Wales, and apprenticeships. Neither does the levelling-up fund currently live up to its name, with each Welsh local authority set to receive around £1.3 million this year. It is clear that these UK funds amount to a levelling down for Wales.

Despite this contradiction and the urgent risks that we now face, there have been no signs of improvement since we last debated these funds in June. Only six months remain of this financial year, and the UK Government has still not announced any successful bids for the community renewal and the levelling-up funds. That is despite the promises previously made to announce bids in July. And partners are right to ask how projects are supposed to deliver by March as required. This is a delay that leaves communities in the dark and badly compromises what can be achieved for people and businesses here in Wales.

Neither have we had any genuine engagement with the bidding assessment exercise, and with our proposed input being restricted to entirely unacceptable terms. This is an opaque and distant process that does not represent devolution to local communities. The UK Government have forced councils to compete and act as administrators, with bids being assessed in Whitehall and funding decisions made by UK Ministers in Westminster.

And plans for the shared prosperity fund are equally concerning. Eighteen months after Brexit, we can still expect no more than a high-level spending framework in next month’s spending review. Yet we remain unclear about what role devolved Governments will have. We are also unsure if the shared prosperity fund will even be open for business next year due to the ongoing delays. In no way can the UK Government’s approach to post-Brexit funding be described as acceptable partnership working, let alone effective inter-governmental relations.

This is disappointing, given the Prime Minister’s commitments following the summit in June that I attended with the First Minister regarding more effective inter-governmental relations across the UK, and the willingness of this Government and our First Minister to collaborate effectively in doing so.

The UK Government’s incoherent and chaotic action have also failed to impress UK cross-party parliamentary groups, the Institute for Government and devolved Parliaments and Governments. The Business, Energy and Industrial Strategy Select Committee recently published a report on the levelling-up programme, and I quote:

'The funding available to achieve levelling up is disparate and lacking any overall coherent strategic purpose or focus';

'the apparent absence of any meaningful strategic engagement with the devolved administrations around the levelling up agenda, amplifies the lack of clarity and focus around this major policy.'

And on the shared prosperity fund, the Institute for Government said in July:

'the UK government will be spending on policy functions that are predominantly devolved responsibilities. We have outlined the risk that this will produce unhelpful duplication of functions and fragmentation of service provision.'

The High Court have also agreed to hear a legal challenge brought by the Good Law Project about the UK Government using the levelling-up fund for political benefit, rather than need.

Increasing concerns about the emerging problems and the funding gaps facing sectors have also been raised with me by Welsh partners, including the Welsh Local Government Association, the Wales Council for Voluntary Action, Federation of Small Businesses Wales and Universities Wales. Despite such warnings and honest advice, the UK Government has failed to listen, a decision which will cost Wales job opportunities and undermine badly needed projects.

Deputy Llywydd, it is not yet clear what the impact of this approach will be, but I was happy to support the Plaid Cymru amendments during the June debate. I can confirm once more today that we will undertake an impact assessment when practicable, as agreed at that time. The clear majority position in this Senedd should be noted by UK Ministers. Indeed, the people of Wales were offered a manifesto that endorsed the UK Government's plans at this year's Senedd elections, but that did not win the support of the Welsh public, as we know. There is a clear majority for a 'made in Wales' approach that respects devolution.

Our own framework for investing replacement EU funds builds on years of partner engagement. It is based on evidence and agreement, with clear priorities for Wales, and this is what a team Wales approach looks like. Our plans bring power and funding closer to communities by transferring funding and responsibilities to the new corporate joint committees. The framework also recognises that some interventions, like apprenticeships and business support, are most cost-effective and accessible at a national level. We have also commissioned further advice from the Organisation for Economic Co-operation and Development to help design the best multilevel governance structures for economic development within Wales. And again, this is what a real partnership approach looks like.

Deputy Llywydd, I have made clear in a letter to the new Secretary of State Michael Gove that we are open to meaningful discussions on how best to work together to make these funds a success. The UK Government has an opportunity to show it has listened and to end an era where it says to Wales, 'You'll get what you're given.' No Welsh Government of any political leadership could or should accept that approach from any UK Government.